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House approves bill geared to keep federal transportation funding intact through end of May 2015

By Jeff Berman, Group News Editor
July 16, 2014

In the case of preserving the crumbling state of affairs when it comes to federal transportation funding, it appears that something may be better than nothing.

That was made clear yesterday when the House of Representatives voted by a 367-55 margin to approve H.R. 5021, the Highway Transportation and Funding Act of 2014, which will keep federal transportation funding intact through May 2015.

This $10.9 billion bill, which was co-sponsored by Reps. Bill Shuster, R-PA, who is also Chairman of the House Transportation and Infrastructure Committee, and Dave Camp, R-MI, will now be sent to the United States Senate.

“We have an immediate, critical need to address the solvency of the Trust Fund and extend the current surface transportation law,” Shuster said in a statement issued by the House T&I Committee. “This bill does that in a responsible way, with policies that have all previously received strong bipartisan and bicameral support,” Shuster said.  “If Congress fails to act, thousands of transportation projects and hundreds of thousands of jobs across the country will be at risk.  This legislation provides much-needed certainty and stability for states.  Furthermore, this bill in no way precludes Congress from continuing to work on addressing a long-term funding solution, and a long-term reauthorization bill, which remains a top priority for my Committee.  However, this legislation is the responsible solution at this time, ensures that we don’t play politics with these programs, and enables us to continue making improvements to our surface transportation system.”

The bill’s language points out what has been apparent for more than a while: the existing Highway Trust Fund system is unsustainable and unable to meet our Nation’s 21st century transportation needs, and also noted that Congress should enact and the President should sign a surface transportation reauthorization and reform bill prior to the expiration of this Act.

At the same time, this is not catching anyone off guard, considering that that the main funding mechanism for funding the HTF, the federal gasoline tax, has not been increased since 1993. HTF funds are allocated for federal highway, transit, and highway safety programs.  Diesel taxes represent about 90 percent of Highway Trust Fund (HTF) net revenues, which are vital when it comes to fixing, repairing and developing the country’s transportation infrastructure.

The Department of Transportation said recently that the HTF could dip below $4 billion by the end of this month, which stands as the minimum amount DOT “prefers to keep…in order to properly manage day-to-day financial transactions,” according to the American Association of State Highway and Transportation Officials (AASHTO). The HTF kicked off fiscal year 2014 on October 1, 2013 with a balance of $1.6 billion and after the beginning of the fiscal year it received a $9.7 billion transfer from the United States General Fund. But even with this bridge loan of sorts, DOT said,  “the surface transportation program continues to outlay at a greater pace than receipts are coming in.” In other words, it is functioning as a model of insolvency.

What’s more, according to data from the Pew Charitable Trust, the Highway Trust Fund has lost nearly 40 percent of its total value to inflation since the last time gasoline taxes were increased in 1993, the New York Times reported. 

Numbers from other sources don’t make the situation any more optimistic either, with the House Transportation and Infrastructure (T&I) Committee recently noting that by the end of 2014, a total of $54 billion will have been transferred from the General Fund into the HTF in order to remain solvent, including an $18.8 billion transfer signed off on by Congress as part of the federal transportation bill, MAP-21, which is set to expire at the end of September.

While raising the federal fuel tax ostensibly is the most logical and direct way to stem the HTF’s financial woes, it continues to be viewed as a “non-starter” on both sides of the aisle in Congress.

Instead, the Highway Transportation and Funding Act of 2014 turns to other potential revenue sources, including: extend pension smoothing relief that was enacted in 2012 as part of the MAP-21 legislation and would allow employers to continue to use historic interest rate averages to calculate their pension contributions, which is estimated to raise $6.4 billion over ten years; transferring $1 billion from the Leaking Underground Storage Fund (which addresses petroleum releases from federally regulated underground storage tanks) into the HTF, which would have no revenue effect; and require the Secretary of Transportation to charge and collect a fee of .3464 percent ad valoreum on merchandise formally entered or released into the U.S, which would raise an estimated $3.5 billion.

“The key players in Congress are all signaling that since the transfers from the general treasury accounts into the HTF have been going on for six years, this go around is again a short-term fix, and they are running out of off-sets and are scraping the bottom of the barrel,” James Burnley, a partner at Washington, D.C.-based law firm Venable LLP and former Secretary of Transportation under the late President Ronald Reagan, recently told LM. “Doing these short-term patches has gotten harder, and because of basic underlying trends each time we go through this, we need more money as the shortfall is growing. It is time for leadership in both parties to try to come to a consensus to a longer-term remedy, whatever that means, and find other alternatives. Political leadership in both parties in Congress is saying they have run their string out with short-term patches in this round and are not likely able to keep doing this.”

About the Author

Jeff Berman headshot
Jeff Berman
Group News Editor

Jeff Berman is Group News Editor for Logistics Management, Modern Materials Handling, and Supply Chain Management Review. Jeff works and lives in Cape Elizabeth, Maine, where he covers all aspects of the supply chain, logistics, freight transportation, and materials handling sectors on a daily basis. .(JavaScript must be enabled to view this email address).

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